I am here to talk about a top-rated exchange and how you can minimize risk and make profit. I will also show how I am using one of their stablecoins to avoid transaction fees.
I am not here to put down any exchanges, but I will focus on Coinbase in particular. Most of the principles will apply to other exchanges as well. I know that Binance is very popular and a favorite of many Publish0x authors and readers. I am also becoming more familiar with Kucoin, but to be honest, I have not been entirely impressed with their exchange. For one thing, I have found it difficult to navigate and some of their fees are high. I am not giving up on them though. I think they would be wise to have clearer and more detailed tutorials.
The thing about Coinbase, I didn’t even need a tutorial. It was very intuitive from the beginning. For more advanced users, I recommend Coinbase Pro. You do not need to register all over again. You may simply go to the Coinbase Pro site and use the same login info you use for your Coinbase account.
Ok, so here are my 5 tips to maximize your gains and minimize your losses on Coinbase:
- Watch the tutorials. There is a lot of opportunity to make money for educating yourself and the risk is zero. All you have to do is open an account and before you buy positions in a bunch of altcoins, start watching the short educational videos. You can easily make $30 to $50 in an afternoon and you will learn a lot about different altcoins that you may not have been familiar with before. Recently, I was pleased to see that Coinbase had added some new altcoins and one of them had $6 in rewards for watching 3 really short videos and answering one question for each. (If you miss the question, you get another chance). Some other exchanges may have similar incentives, but I am not familiar with them.
- Try to avoid fees. Right now, I use DAI rather than USD when I trade. DAI is a stable coin where you can hodl. (See my glossary if you are new to the crypto world). Let’s say you buy $500 worth of Algorand (ALGO). The market is up and down, but let’s suppose there is a short bull run. This could be as short as two days or even less. You look in your portfolio and suddenly, you have $620 worth of ALGO. Great. Now you think, I want to reap my earnings so you click the buy/sell tab and choose “convert.” A lot of people would instinctively choose the well-known USD stablecoin. Your money will be stable there, but when you go to checkout, you see a fee (about $9.00). Try the same thing with DAI and you will see $0 in fees (as of right now). My point? Shop around. This can change, but you will be able to see what your fee is before you finalize a transaction. Then hold your coin in DAI while you get a nice little 2% interest rate on that holding. Then when the price of ALGO or some other coin you have been looking at has a bad day or two, and the fundamentals and news on this coin still look good, there may be an opportunity to buy it and repeat the process. You know buy low, sell high.
- Diversify. The old cliché is appropriate: Don’t put all your eggs in one basket. Do research. Then spread your assets out. Although I am a crypto enthusiast, I do not believe in putting all of your savings in crypto. Regardless of whichever crypto exchange(s) you use, I say spread the net wide, and you just might catch something special. I did this with Decentraland (MANA). I made a 30% gain while all my other altcoins were stagnant. I converted MANA to a stablecoin and secured my reward. Nice.
- Don’t Bet the Farm. Investing in crypto, like the stock market, is risky. You have heard it before, but it is worth repeating: Don’t invest in anything considered high risk if you are not willing or can’t afford to lose it all. The chances of actually losing it all with the coins on Coinbase is pretty low, but it could happen. It is likely that you will lose on some positions.
- Be patient. Just like there will be major short-term upswings and downswings with crypto, there will also be very large swings over time. In a bear market, you have two choices: 1. Ride it all the way down and then ride the bull back up. 2. Pull your asset while it’s going down, before it goes all the way. Accept your loss and move on. Neither option is necessarily wrong. You can always look back and see what could have been. History can teach us a lot. Look at the Bitcoin chart below. You will notice that the ultimate trend is up. This is an illustration in how patience can pay off:
When I look at that chart, my instinct (developed over more than two decades of stock trading) tells me to wait before putting a huge amount in BTC. Patience applies to when to buy as well. Following a massive bull market, you can expect a major correction at some point. No one knows when for sure. Some speculators point to it topping off at $70,000 or more before a correction. Perhaps. However, it may keep bouncing around for a while before it makes a major move up or down. Aggressive day or weekly traders my ride these 5% waves and make decent profit.
The fact is we not only can know for sure when it will go down, we do not know for sure how far down it will go. We cannot panic, but sometimes we cannot afford to lose it all, so we choose to get out while we can. That is another reason it is wise to only put money in an asset that you can afford to lose. Then you can afford to be patient. I once held an EFT stock for ten years. I had put in about $2000 in this EFT before it began a long two year downward spiral. I was so convinced that it would have a strong future, but my timing was wrong. Near the bottom, I put another $2000 in this EFT. I waited for years and finally, its time came. It was stagnant for so long, but I was patient. Then, in a 9-month bull run, not only did I recover my losses, but I also made a handsome profit.
Someone might argue that I could have done better if I had reinvested what I had left instead of waiting. Perhaps that argument is valid for them, but it wasn’t for me. Investing is a very personal endeavor. You need to know yourself.
If you like what you have read and want to give Coinbase a try, click on this link and we will both get a nice $10 gift when you buy or sell at least $100 of crypto.
You will be able to do the same for others with their referral program.
By the way, I would love to hear from you in the comment sections about your favorite exchange and what feature(s) it has that makes it special.
As always, buy, sell, trade, and exchange at your own risk. This information is merely my non-professional opinion.